EXPLAINER: How increase in telecom tariff will affect ordinary Nigerians

Recently, the Association of Licensed Telecom Operators of Nigeria (ALTON) wrote to the federal government asking for upward reviews in voice calls, short message services (SMS) and data costs.

ALTON said this in a letter addressed to the Nigerian Communications Commission NCC, citing the rising cost of running a business.

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“In the letter, it said it was expedient for the telecommunications sector to undergo periodic cost adjustments through the commission’s intervention. 

As such “an upward review of the price determination for voice and data and SMS. Given the state of the economy and the circa 40 per cent increase in the cost of doing business, we wish to request an interim administrative review of the mobile (voice) termination rate for voice; administrative data floor price, and cost of SMS as reflected in extant instruments.

“For data services, we wish to request that the commission implements the recommendations in the August 2020 KPMG report on the determination of cost-based pricing for wholesale and retail broadband service in Nigeria.

“In implementing the said recommendations, however, we recommend that the 40 per cent increase in the cost of doing business be factored in to arrive at a cost price per GB in view of the current economic situation.”

The group also highlighted other demands to the commission such as to explore other penalties for operators other than punitive monetary sanctions, extend the payment timeline of relevant regulatory levies and fees, prevail on the federal government to sign the executive order declaring telecoms infrastructure as a critical national infrastructure to mitigate cost spent replacing damaged and stolen infrastructures, among others.

It added that the Mobile (Voice) Termination Rate (MTR) for voice, administrative data floor price and cost of SMS as reflected in extant instruments should also be increased.

“For small operators, the new interim MTR of N6.58 from N4.70 reflects a 40 per cent increase in the cost of business.”

ALTON said this had increased energy costs, increasing their operating expenses by 35 per cent.

Implications on ordinary Nigerians

Going by the proposed upward review by the telecom association, the charge on calls is expected to increase from N6.4 to N8.95, while the price cap of SMS will increase from N4 to N5.61.

The effect of the increase in data cost, voice and SMS will mean exclusion from the internet and limited calls.

This is because as the internet becomes more expensive for the average Nigerian to access the internet consistently, the more likely it is that the country will be left out of the 4th industrial revolution. This is even as the United Nations has indicated that access to the internet may soon be considered as an essential human right.

In the same vein, with a growing number of start-ups’ and entrepreneurial activities; Small and Medium Enterprises make up about 90 per cent of African businesses.  In Nigeria, it accounts for 84 per cent of total employment, numbering over 39 million across the country, so, it will become difficult for most of them who use internet and rely on calls and SMS to facilitate their business.

This is in addition to social media vendors who utilize the social media to market and sell their products.

In the same vein, an increase in calls, SMS and data will mean that more Nigerians may resort to borrowing more data and airtime from telecom providers to carry out calls or subscriptions for the internet.